The decree of July 24 amending the ALUR law
The ALUR law regulated the evolution of rent in tight areas, which is the case in the municipalities of Thonon-les-Bains and Evian-les-Bains. In application of this regulation, decree no. 2017-1198 of July 27, 2017, amended by the decree of July 24, 2024 (you can consult it here: HERE), relating to the evolution of certain rents in the context of a new rental or a lease renewal organizes the fixing of the lease rent and organizes the evolution of rents in tight areas. It was published in the Official Journal on July 31, 2024. This decree is renewed for one year, that is to say until July 31, 2025, the framework for the evolution of certain rents in the context of a new rental or a lease renewal. This concerns the municipalities where the vacant housing tax applies. The rent regulation system is now in force from 1 August 2024 to 31 July 2025.
Article 18 of the law of 6 July 1989: "For each of the areas of continuous urbanization of more than 50,000 inhabitants where there is a marked imbalance between the increase in supply and demand for housing leading to significant problems of access to housing in the entire existing residential stock, in particular due to the high level of rents, the high level of purchase prices for old housing or the high number of housing applications compared to the number of annual moves into the social rental stock, the maximum amount of change in rents for vacant housing and renewed contracts is set annually by decree in the Council of State, after consulting the National Consultation Commission. This decree may include specific adjustments, in particular in the event of work carried out by the owners or clearly undervalued rents."
THE RULE:
As provided for in Article 3 of the Decree, when a vacant dwelling is the subject of a new rental in a tense area, the rent of the new rental contract cannot exceed the last rent applied to the previous tenant.
If no rent review has taken place during the twelve months preceding the conclusion of the new rental contract, the amount of the rent applied to the new tenant cannot exceed the last rent applied to the previous tenant revised according to the fluctuation of the reference index.
The decree does not apply to dwellings unoccupied by a tenant for more than 18 months.
Remember that the rent is free, except in the case of rent control, for dwellings that are the subject of a first rental.
N.B.: Rent control currently exists in 7 territories with a total of 26 municipalities (implemented by the ELAN law in 2018). Rents must respect a ceiling set by prefectural decree.
EXCEPTIONS:
Several exceptions are provided for in Article 4 of the decree concerning the capping of the re-letting rent.
Improvement or compliance work
First, the lessor could increase his rent by an amount higher than the indexation if he carries out work. The decree provides for an exemption when the lessor has carried out, since the conclusion of the initial rental agreement with the previous tenant or, if the lease has been extended since its last renewal, it is necessary to carry out improvement or compliance work with the defined decency characteristics.
The decree specifies that this improvement work may concern the private areas or the common areas of the building.
However, the lessor does not recover absolute freedom to set his rent. The decree provides for a double constraint. First, to benefit from this exemption, the lessor must carry out work for an amount at least equal to half of the last year's rent. Then, the increase in the annual rent cannot exceed 15% of the actual cost of the work, all taxes included.The reassessment is therefore possible, without exceeding the higher of the following two limits:
-15% including tax of the amount of the works
- Half of the difference between the rent of the previous tenant and the average rents observed in the neighborhood.
Example: A lessor rents a dwelling for a rent of €1,000 per month, or €12,000 per year. He carries out improvement works for €7,000, or the equivalent of more than half of the annual rent.
The exemption from the decree therefore applies.
The amount of €7,000 may lead to an increase in the annual rent of 15% of 7,000, or €1,050, or €87.50 per month. The new rent can therefore be set at a maximum of €1,075 per month.
IN SUMMARY:
In order to determine the rent to be applied to a property, the geographical location of the rental property must be taken into consideration. Be careful, the areas can change over time. It is also important to take into consideration the context of the rental (new lease, lease renewal or replacement).
In the context of re-letting, Law No. 89-642 of July 6, 1989 establishes by Decree a maximum ceiling for the evolution of rents for unfurnished or furnished accommodation or for the renewal of the lease. This is the case in permanent urbanization areas with more than 50,000 inhabitants, which face a significant imbalance between the supply and demand for housing.
This decree n°2024-854 of July 24, 2024 published on July 31, 2024 renews for one year, until July 31, 2025, the provisions of Decree n°2017-1198 of July 27, 2017. All other provisions of the amended 2017 decree remain in force. It should be noted that the decree does not apply to housing classified DPE F and G (find our article on the DPE HERE), already subject to the rent freeze since August 24, 2022. In addition, improvement work or compliance with good conduct standards may result in an increase in the annual rent.
DECORDIER immobilier agencies can help you with your real estate project:
- Thonon +33 (0) 4 50 72 31 95 / e-mail : thonon@decordier-immobilier.com
- Evian +33 (0) 4 50 75 15 15 / e-mail : evian@decordier-immobilier.com
- Grand-Baie : +230 268 2828 / e-mail : contact@decordier-immobilier.mu
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